High court upholds pension law

By Lloyd DunkelbergerTallahassee bureau

Published: Thursday, January 17, 2013 at 11:50 a.m.

Last Modified: Thursday, January 17, 2013 at 11:50 a.m.

TALLAHASSEE — Florida's budget will be better off, but more changes could be in store for public employee benefits following Thursday's Florida Supreme Court ruling upholding the state's move to make government workers pay 3 percent of their annual salaries toward their pensions.

The 4-3 ruling is a policy victory for Gov. Rick Scott and legislative leaders, who would have had to scramble to come up with $1 billion for the state budget if the court had invalidated the 2011 pension law.

The ruling also creates more momentum for future changes in the state retirement system, including the possibility of eventually ending the traditional pension fund for new workers.

The decision is a defeat for more than 600,000 public workers ranging from state workers to local school employees to firefighters and other county workers who rely on the $127 billion state pension fund for their retirement.

For state workers, it means they will continue to pay 3 percent of their salaries for the pension, while they have gone more than six years without a pay increase. It also eliminates any cost-of-living increases for retirement benefits earned after July 1, 2011.

"Balancing the state budget on the backs of middle-class, working families is the wrong approach for legislative leaders and the governor to take," said Andy Ford, head of the Florida Education Association, a teachers' union that led the challenge of the pension law.

Legislative leaders and Scott praised the decision, saying it validates their argument that public workers should pay for part of their retirement plans and it removes a major financial question from the state budget.

House Speaker Will Weatherford, R-Wesley Chapel, who has suggested that the state shift new workers from the traditional pension plan to a 401(k)-type system, called the ruling "a decisive victory for taxpayers."

Senate President Don Gaetz, R-Niceville, said the decision reflected the state's "efforts to maintain a sound retirement system ... as well as the reality that Florida taxpayers can no longer bear the full cost of this benefit."

Politically, the move may have alienated thousands of government workers. But state leaders seemed to be banking on the fact that pensions like those offered to government workers are now rare in the private sector, where workers have seen retirement benefits eroding for more than two decades.

State Sen. Nancy Detert, R-Venice, noted the discrepancy. "I think it's fair," Detert said. "They should be glad they even have a pension they can contribute to."

In passing the law, legislative leaders had cited the fact that Florida was the only state that did not require its employees to contribute to the pension fund — a decision that was made in 1974.

Scott, who has repeatedly raised questions about the financial viability of the state pension and had previously backed a 5 percent contribution plan, said the opinion "supports our efforts to lower the cost of living for Florida families."

"This means even more businesses will locate and grow in our state, which creates even more opportunities for Floridians to live their version of the American dream," Scott said.

Senate Budget Chairman Joe Negron, R-Stuart, said if the state had lost the ruling, he would have recommended that the workers be immediately repaid their 3 percent contributions plus interest. It would have forced lawmakers to find more than $1 billion in the current budget, with further implications for the next state budget.

An adverse ruling would also have impacted county governments. It was estimated last spring that reimbursing the county workers who rely on the state pension would have cost counties an estimated $600 million.

<p>TALLAHASSEE — Florida's budget will be better off, but more changes could be in store for public employee benefits following Thursday's Florida Supreme Court ruling upholding the state's move to make government workers pay 3 percent of their annual salaries toward their pensions.</p><p>The 4-3 ruling is a policy victory for Gov. Rick Scott and legislative leaders, who would have had to scramble to come up with $1 billion for the state budget if the court had invalidated the 2011 pension law.</p><p>The ruling also creates more momentum for future changes in the state retirement system, including the possibility of eventually ending the traditional pension fund for new workers.</p><p>The decision is a defeat for more than 600,000 public workers ranging from state workers to local school employees to firefighters and other county workers who rely on the $127 billion state pension fund for their retirement.</p><p>For state workers, it means they will continue to pay 3 percent of their salaries for the pension, while they have gone more than six years without a pay increase. It also eliminates any cost-of-living increases for retirement benefits earned after July 1, 2011.</p><p>"Balancing the state budget on the backs of middle-class, working families is the wrong approach for legislative leaders and the governor to take," said Andy Ford, head of the Florida Education Association, a teachers' union that led the challenge of the pension law.</p><p>Legislative leaders and Scott praised the decision, saying it validates their argument that public workers should pay for part of their retirement plans and it removes a major financial question from the state budget.</p><p>House Speaker Will Weatherford, R-Wesley Chapel, who has suggested that the state shift new workers from the traditional pension plan to a 401(k)-type system, called the ruling "a decisive victory for taxpayers."</p><p>Senate President Don Gaetz, R-Niceville, said the decision reflected the state's "efforts to maintain a sound retirement system ... as well as the reality that Florida taxpayers can no longer bear the full cost of this benefit."</p><p>Politically, the move may have alienated thousands of government workers. But state leaders seemed to be banking on the fact that pensions like those offered to government workers are now rare in the private sector, where workers have seen retirement benefits eroding for more than two decades.</p><p>State Sen. Nancy Detert, R-Venice, noted the discrepancy. "I think it's fair," Detert said. "They should be glad they even have a pension they can contribute to."</p><p>In passing the law, legislative leaders had cited the fact that Florida was the only state that did not require its employees to contribute to the pension fund — a decision that was made in 1974.</p><p>Scott, who has repeatedly raised questions about the financial viability of the state pension and had previously backed a 5 percent contribution plan, said the opinion "supports our efforts to lower the cost of living for Florida families."</p><p>"This means even more businesses will locate and grow in our state, which creates even more opportunities for Floridians to live their version of the American dream," Scott said.</p><p>Senate Budget Chairman Joe Negron, R-Stuart, said if the state had lost the ruling, he would have recommended that the workers be immediately repaid their 3 percent contributions plus interest. It would have forced lawmakers to find more than $1 billion in the current budget, with further implications for the next state budget.</p><p>An adverse ruling would also have impacted county governments. It was estimated last spring that reimbursing the county workers who rely on the state pension would have cost counties an estimated $600 million.</p>